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Speak with Li Junfeng: Plunging prices set off panic in industry-the price of price reduction

Q: In the past 20 years, our industry has been pursuing parity, and even low prices, and the same price of storage, but at present, is it the competitiveness of the industry, or a harm to the industry? How to measure it?

Li: In addition to straightening out the relationship between capacity and output, it is also necessary to correct the misunderstanding of cost and price problems in the photovoltaic industry. For a long time, the industry has continuously reduced costs through technological advances and large-scale production, so that lower prices are reasonable. In the past, all sectors of society have provided help to the industry’s development, the state’s renewable energy subsidies, export tax rebates, land support, electricity price concessions, but now the further reduction of the cost of the photovoltaic industry should not reduce the price too quickly, but to transmit the technological progress benefits to various stakeholders. We must reasonably distribute this part of the profit to all links of the industrial chain.

Q: Further cost reduction through technological progress is still an eternal pursuit. But we don’t have to cut the price of electricity. We should maintain stable, and then establish a good distribution mechanism.

Li: The photovoltaic electricity price is now lower than the price level required by the country, and the overall photovoltaic industry will continue to decline, but prices may not necessarily decrease. How can we give back reasonable profits to the local government, industry volume, and various links that have helped us with such a price reduction? How to ensure reasonable profits for domestic and foreign distributors and give reasonable returns for investors? This price reduction is different from before, no one has allowed the photovoltaic industry to reduce prices so significantly. No stakeholder benefited from this price reduction. From a national perspective, this year’s photovoltaic production and export volume have more than doubled, but the contribution of the photovoltaic industry to the country’s GDP growth rate has decreased, and the export volume has also significantly decreased. Enterprise profits have also significantly declined, leading to a significant decrease in national taxation. Perhaps some people think that the customer is satisfied, but in fact, it’s not the case. For example, European dealers, who purchased cell modules in the first half of the year but still haven’t used them up, they have new low-priced modules coming in. How do they explain this to the customer? Domestic developers are the same. This is the price of price reduction.

“Without reasonable profits, it is impossible to drive technological progress, and it is impossible to improve employee welfare benefits, so the industry lacks competitiveness. If it is a high profit industry, it is more conducive to gathering resources. Why is the photovoltaic industry advancing rapidly in technology? Because excellent talents all gather here. But if there is a loss or even bankruptcy, how can we retain high-end talents? How can we continue to make progress? So when we lower price, no one is satisfied, then why do we do things that nobody is satisfied with?”

Q: Actually, end customers don’t have much demand for a decrease in module prices. We understand that customers don’t feel much about it because in the past, modules accounted for 70% or more of the system cost in foreign countries, but now the proportion is getting lower and lower. On the contrary, if it can improve user experience and extend the lifespan of power plants, end customers prefer it more.

Li: Yes. Electricity prices in Europe and America are relatively high, and solar energy storage is also very popular. They spend money to replace fossil fuels regardless of the lowest price for photovoltaic power generation. But it’s different in China. The price has been reduced without limit, does photovoltaic still have investment value? There is no investment value, why do we invest in it? The Central Economic Work Conference put forward a very good slogan, as “We should promote and encourage effective investment.” If investment has no benefits,is it still called investment?

Q: This is what we mean by high-quality development.

Li: Yes. The high-quality development of an enterprise must achieve sustainable growth, sustainable profits, provide sustainable taxation, and continuously improve employee welfare benefits.

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